S&P cut Greece's
sovereign rating one notch further into junk territory, citing the
country's growing cash constraints. S&P cut Greece's rating to
B-minus from B, while keeping the country on watch for a downgrade. The
downgrade comes as officials in Greece & other European
capitals frantically search for ways to keep Greece from running out of
money next month, after initial plans to finance the cash-strapped
country fell flat with its creditors. Diminishing tax revenues in the
run-up to Jan elections have
pushed Greece's finances to a precarious point. Greek officials now
fear
that the gov, led by the anti-austerity Syriza party, could run
out of cash as soon as early Mar.

Consumer borrowing in the US climbed in
Dec as Americans boosted their credit-card use by the most
in 8 months. The $14.8B increase in total credit, or an
annualized 5.4%, followed a revised $13.5B advance
in Nov, according to the Federal Reserve. For all of 2014, borrowing increased 6.9%
after 6% a year earlier. An improving job market & cheaper gasoline gave consumers
the impetus to spend during the holiday-shopping season,
allowing Q4 household purchases to rise at the
fastest clip in almost 9 years. The forecast called for a $15B advance. The report doesn’t
track mortgages, home-equity lines of credit, or other real
estate-backed debt. Revolving debt, including credit-card balances, increased
$5.8B after a $945M decline the prior
month. Non-revolving credit, which includes car & education
loans, rose $9B, the smallest gain in a year, after advancing $14.4B in the previous
month. Autos sold at a seasonally adjusted 16.8M, down
from 17.1M in Nov. Federal lending to consumers, which mostly entails school
tuitions, increased $5.1B before seasonal adjustments,
after rising $5.8B in Nov. Student loans in Q4 increased to $1.32T from $1.31T in the prior 3 months.
Borrowing for the purchase of motor vehicles rose to $955B last qtr after $943B in Q3.

Federal Reserve Bank of Atlanta pres
Dennis Lockhart said he wants to see inflation move closer to
the central bank’s 2% target before raising interest
rates from near zero around mid-year or later. “I’d like to see some evidence that what we believe to be
transient factors driving recent weak inflation readings are, in
fact, passing,” Lockhart said. “I would
like to see firming of inflation readings. This will give me
confidence that the outlook on which important decisions will
swing remains realistic and likely to play out.” The FMOC said last week it would
be “patient” with its plans to raise interest rates. Lockhart said today’s jobs report was part of an
improvement showing “that the economy is on a path to a
satisfactory and desirable state of health.” With the
unemployment rate falling over the past several years, “we
would seem to be approaching an acceptable steady-state level of
employment.” Even as the Fed approaches its goal of full employment, it
is far from lifting inflation toward its target. “There are worrisome aspects of the current inflation
picture, and reading underlying trends is problematic at
present,” Lockhart said. The Fed’s preferred inflation gauge, based on personal
consumption expenditures, rose 0.7% in Dec from a
year earlier & has lingered below the central bank’s 2%
goal for 32 months. Market-based expectations for inflation in
the 5 years starting 5 years from now tumbled last month
to 1.75%, the lowest since 1999. “As of today, I remain comfortable with the assumption
that circumstances will come together around mid-year, or a
little later, that will deliver sufficient confidence to begin
normalization with the liftoff decision,” Lockhart said. “I
won’t be more definitive than that. I think all possibilities
from June on should remain open. I don’t at this juncture have a
prediction or preference. Timing will depend on what the data
tell us.”

With selling in the PM, the gain for Dow this week (& month) was trimmed to 650, not bad considering the damage done last month. While no great surprise, today's selling began after the downgrade on Greek debt. Even though it was expected, it's always a shock when announced. Dow is back into the red YTD, not a good sign for the balance of the. Earnings season is not over. New reports will move the stock market along with news about fighting in Ukraine & MidEast. Bulls tried to take command of the markets but lost their grip late today.